PhonePe asks ICICI Bank to cite reasons for blocking transactions

After ICICI Bank blocked UPI transactions made through the Flipkart-owned PhonePe app, its cofounder & CEO Sameer Nigam, urged the country's largest private bank to cite reasons for its move. About 72 hours ago, ICICI Bank denied permission to its customers to link their accounts to PhonePe. The bank had told TOI in a prepared statement on Sunday, that it had raised 'security concerns' at appropriate forums about PhonePe's access to UPI data.

Nigam wrote in an open letter Monday that due to ICICI Bank's move, about 20,000 transactions had failed which amounted to Rs 5 crore. No one is telling us what the exact issues are, yet ICICI Bank claims the blockade will stay until the concerns are resolved, he said. The timing of ICICI Bank's action against PhonePe is surprising as the app has been live since August last year. PhonePe is a third-party app but it inked a partnership with Yes Bank to go live on UPI. Interestingly, Flipkart recently integrated UPI payments on its website and is offering customers cashback on their wallet when they us PhonePe UPI payment.

"Our UPI payments integration has been live on Flipkart, Myntra and a couple of smaller merchants' websites since Oct 2016. So ICICI had more than two months to inform Yes Bank, NPCI or us if they felt our solutions did not meet the UPI guidelines. Either they felt our integration was okay until now, or they felt we were being restrictive but decided to sit on this fact till now for reasons known only to them," he said while requesting the bank to share its detailed reservations so that PhonePe can review them. Till Monday evening, PhonePe or Yes Bank did not put out any official communication, claimed Nigam. TOI reported in its January 16 edition that latest developments are indicative of a turf war brewing between the traditional banking firms and new age digital payment companies. The State Bank of India deputy managing director Manju Agarwal had told TOI that the bank is making sure customer data doesn't leak and that they were planning to take the issue with the Reserve Bank of India and National Payments Corporation of India ( NPCI) to get non-banks blocked.

Nigam claimed his company had taken all necessary steps before it went live on UPI. "We went through over a 100 plus use cases, detailed certification, vulnerability assessment, penetration testing and third party application security testing, before NPCI gave us permission to go live.

While the tussle between ICICI Bank and PhonePe seems to have just started gaining ground, Nigam said he was hoping that ICICI Bank will reverse its move and work towards finding a lasting solution.